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Rule 321. Formation or Acquisition of Subsidiaries

This version was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this version has not yet been determined.

No member organization may, without the prior written approval of the Exchange, form or acquire a subsidiary company. The member organization shall require such subsidiary to comply with the following provisions.


• • • Supplementary Material: --------------

Information Regarding Subsidiary Companies of Member Organizations

.10 Definition of subsidiary

For purposes of this rule, the term "subsidiary" means an entity engaged in a securities or kindred business that is controlled by a member organization within the meaning of Rule 2. However, control shall not be presumed, for purposes of this rule, merely because a member is a director or principal executive of another person.

Adopted.
August 31, 1993.
February 27, 2006, effective March 8, 2006 (NYSE-2005-77).
Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.

Selected Notice: 08-64.
.11 Form of organization

A subsidiary shall be an incorporated company or partnership.

Amendments.
August 31, 1993.
August 19, 1994.
.12 Name

The name of the subsidiary and the name of the member organization must be sufficiently different to prevent confusion. The mere addition of "Inc." or "and Co." may not be sufficient.

Amendments.
August 31, 1993.
August 19, 1994.
.13 Severance of connection with subsidiary

The Exchange may at any time require that the member organization and the partners or stockholders thereof sever all connections with the subsidiary including the disposition of all securities and other interests therein, or such amount thereof as determined by the Exchange. Concurrent with or at any time after directing such severance, the Exchange may require the member organization to change its name if the Exchange finds that the name of the former subsidiary may be confused with the name of such member organization.

Amendment and Renumbered.

August 31, 1993.
February 27, 2006, effective March 8, 2006 (NYSE-2005-77).
.14 List of stockholders

A list of stockholders or partners of the subsidiary shall upon request be submitted to the Exchange.

Amendment and Renumbered.

August 31, 1993.
.15 Reserved.

Amendment and Renumbered.

August 31, 1993.
Amended by SR-FINRA-2017-007.
.16 Capital requirements

The Exchange will not prescribe capital requirements for a subsidiary. However, the Exchange will require a pro forma balance sheet of the subsidiary to be filed with it before any action is taken on a member or member organization's application to form such a subsidiary. The Exchange may, however, require the submission of subsequent financial statements.

Amendment and Renumbered.

August 31, 1993.
.17 Banking commitments

A subsidiary's banking and other commitments, loans and obligations shall be kept separate and distinct from those of the member or member organization with which it is affiliated.

Amendment and Renumbered.

August 31, 1993.
.18 Functions of a subsidiary

A subsidiary may be formed to do an underwriting, agency or dealer business, or any other business acceptable to the Exchange.

Amendment and Renumbered.

August 31, 1993.
.19 Offices

A subsidiary will be permitted, under the conditions set forth in Rule 343 to occupy the same quarters as those of the member organization.

Amendment and Renumbered.

August 31, 1993.
.20 Books and records

A subsidiary shall keep books and records separate and distinct from those of the member or member organization with which it is affiliated and such books and records shall, upon request, be made available by the member or member organization for inspection by the Exchange. However, such books and records may be maintained by the member or member organization.

Amendment and Renumbered.

August 31, 1993.
.21 Transactions between members or member organizations and subsidiaries

A subsidiary will not be prohibited by the Exchange from having cash or margin brokerage transactions effected for its account by the member or member organization (See Section 11(a) of the Securities Exchange Act of 1934). The rules and regulations applicable generally to customer's accounts shall be applicable to each such account.

Amendment and Renumbered.

August 31, 1993.
.22 Conditions to be complied with after organization of subsidiary but prior to commencement of business

No subsidiary shall commence business after its organization without the prior written approval of the Exchange. Before giving such approval there shall be submitted to the Exchange an opinion of counsel, in form and substance satisfactory to the Exchange, stating (1) that the subsidiary is duly organized and existing, and (2) that the securities, if any, of the subsidiary has been duly and validly issued and is fully paid and non-assessable.

Amendment and Renumbered.

August 31, 1993.
.23 New issues

The provisions of Section 11(d)(1) of the Securities Exchange Act of 1934, relating to the extension or maintenance of credit in connection with new issues, will apply to transactions by a member or member organization in new issues in the distribution of which its subsidiary participated with the same force and to the same extent as if the member or member organization itself had participated in the distribution of such new issues.

Amendment and Renumbered.

August 31, 1993.
.24 Reserved.

Amendment and Renumbered.

August 31, 1993.
March 22, 2001 (NYSE-2000-37).

Amendments.
August 31, 1993.
August 19, 1994.
Amended by SR-FINRA-2009-044 eff. Dec. 14, 2009.

Selected Notice: 09-60.

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